An unexpected turn of events was reported by the New York Stock Exchange a few hours ago. NYSE said it will no longer delist the three main Chinese telecom giants that were supposed to be suspended from trading at NYSE from next week, following an order by the U.S President Donald Trump and his administration.
The announcement comes as a big surprise, only four days after the initial announcement by NYSE that decided to remove China Mobile (CHL), China Telecom (CHA), and China Unicom (CHU), the giant state-owned Chinese telecom companies starting January 11th.
What Was The Reasoning Behind The Decision?
The exchange has issued a statement in which they say that the decision was made “in light of further consultation with relevant regulatory authorities”.
Right after the u-turn announcement reversing the previous Chinese telecom delisting plan, the Hong-Kong listed shares of all three telecom giants concerned soared up. China Unicom was up 6.7% and the remaining two companies reported a spike by 5% each. The Chinese Yuan has also seen a spike following the announcement and has reached its 30-month high.
Reaction Of Chinese Telecom Giants and Chinese Government
China Telecom and China Unicom have both responded to the news by issuing statements confirming they have taken note of the newest development. China Mobile has not been available for comment as of yet.
Following the initial decision to delist the companies, China’s foreign ministry has spoken out yesterday calling the move unwise and the rules upon which the Trump administration based their decision for “random, arbitrary and uncertain”
Hours prior to the reversal of the NYSE decision, the China Securities Regulatory Commission has also commented on the initial move saying that the ban was politically motivated and “entirely ignored the actual situations of relevant companies and the legitimate rights of the global investors, and severely damaged market rule and order”.
Is The NYSE Decision A Complete Surprise?
Apart from the statement issued, NYSE has not been available for any further comment. All we know from their brief statement is that the shock announcement is based on consultations with regulatory authorities. However, their decision comes as a large surprise that was not expected by analysts and raises many questions due to the chaotic development of the situation regarding the ban on Chinese telecoms.
The managing director at GFM Asset Management in Hong Kong, Tariq Dennison, said, “ It shows how little light there is in that set of regulatory guidance so far, especially around the time the U.S. is changing administrations”, as reported by Reuters.
The Analysts View The Ban As Bizzare
The analysts have described the Chinese telecom ban and ban reversal events that unfolded early on Tuesday as “bizarre” and as reported by Bloomberg, there are speculations as to whether the sudden change of decision regarding the Chinese telecom ban decision was motivated by the misinterpretations of orders, unclear regulations, or a more severe geopolitical reasoning.
The director of asset management at Amber Hill Capital Ltd has referred to the NYSE’s latest announcement as unexpected and said, “Some funds that had an obligation to unload these shares will now need to buy them back. Some investors are also starting to pricing in a scenario that the decision to halt delistings could be the start of a de-escalation in tensions between China and the U.S.”